Daimler-Benz and Mitsubishi Negotiating Cooperative Plan

By DAVID E. SANGER, Special to The New York Times

Published: March 7, 1990

TOKYO, March 6—
In what may prove to be one of the most far-reaching industrial linkups, the largest business groups in Japan and West Germany, Mitsubishi and Daimler-Benz, said today that they were negotiating a plan of ''intensive cooperation'' in automobile technology, aerospace, microelectronics and a number of service industries.

If the agreement is completed, as executives on both sides said they anticipated, it will create a series of joint ventures that will give Daimler access to some of Japan's best technology and give the giant Mitsubishi empire a desperately needed foothold in Europe before that market is integrated in 1992.

The arrangement could also pose an enormous competitive challenge for the United States, pitting its biggest businesses against the combined talents and marketing skills of the two most aggressive industrial groups in the booming German and Japanese economies.

Areas of Interest

Japan is particularly interested in Daimler's jet engines and the prospect of building cars with the world's leading maker of luxury cars, Mercedes-Benz; Germany's main interest is electronics, high-technology equipment and space technology, all areas in which Mitsubishi excels.

In separate statements today, both companies said they would meet soon to work out specific accords, but Daimler said that they regarded the talks as ''promising of success.''

The announcement came after a secret meeting this weekend in Singapore involving the top executives of Daimler-Benz and the presidents or chairmen of the four biggest of the 29 Mitsubishi companies - Mitsubishi Heavy Industries, Mitsubishi Motors, Mitsubishi Electric and the Mitsubishi Corporation. The Mitsubishi Corporation, the leader of the group, is one of Japan's biggest trading companies. The meeting was apparently suggested by Edzard Reuter, the energetic chairman of Daimler's managing board.

Neither side would say whether the two groups planned to take an equity interest in each other or whether the arrangement would go beyond cooperation in technology and marketing. But Daimler said, ''The independence of both groups will be respected.'' Daimler-Benz had sales of $37.3 billion in 1988, before its recent acquisition of Messerschmitt-Bolkow-Blohm G.m.b.H., the aerospace concern; the combined Mitsubishi companies had sales of about $82 billion.

In an unusual statement, Japan's powerful Ministry of International Trade and Industry appeared to give its blessing to the deal tonight, saying, ''We welcome the two groups entering into broad-ranging cooperation at a time when international cooperation is seen in so many areas.''

But a senior ministry official acknowledged that the proposed alliance was rife with political problems. Members of the European Community are deeply suspicious of Japan's rush to enter the European market before 1992. On Monday, amid renewed debates over restraints on Japanese ''transplant'' auto plants in Europe, Edith Cresson, France's Minister for European Affairs, said Japan's ''strategy is to set up plants in Japan, Europe and America wherever they can and switch production so they can destroy U.S. and European auto makers.''

Moreover, both companies are closely associated with the rise of the Axis powers 50 years ago, a history that, one Japanese official said recently, ''will never go away.'' Mitsubishi Heavy Industries built the Zero, the durable fighter that led Japan's invasion forces throughout Asia; Messerschmitt built much of the Luftwaffe. Even today, Mitsubishi Heavy Industries is Japan's largest arms maker and Daimler is one of Europe's largest.

Japan is barred from exporting arms or arms technology, except for special agreements with the United States. And a Mitsubishi spokesman, Masao Takemoto, said tonight that the exchange of ideas and technology would ''specifically exclude defense.'' It is unclear how the two companies would handle what the military terms ''dual use technologies'' that can be used for both commercial and military purposes, like electronics or high-temperature metals used in jet engines.

The announcement of the agreement comes as a number of Japanese companies are scrambling to link up with European partners, or build their own operations in Europe. Most of Japan's leading car makers, for example, have announced plans to build plants within the European Community, except for Mitsubishi Motors, which has long been rumored to be negotiating with Mercedes for a production partnership. Mitsubishi helps market Mercedes in Japan.

To Relax Frictions

At a news conference today, attended only by Japanese reporters, Yoshio Taniguchi, vice president of Mitsubishi, reportedly said the company hoped the business alliance would relax trade frictions between Japan and the European Community. But he gave no specifics of the arrangements, saying only that the companies had scheduled further meetings.

The Singapore meeting, he said, was attended by Yotaro Iida, chairman of Mitsubishi Heavy Industries; Toyoo Tate, chairman of Mitsubishi Motors; Moriya Shiki, president of Mitsubishi Electric, and Shinroku Morohashi, president of the Mitsubishi Corporation. In addition to Mr. Reuter, Daimler was represented by its deputy chairman, Werner Niefer, who is also chairman of Mercedes-Benz.